Hypo Alpe Debt Cut Four Steps as Insolvency Not Ruled Out

Hypo Alpe-Adria-Bank International AG, the nationalized Austrian bank, had two of its debt ratings cut four steps by Moody’s Investors Service as the Austrian government isn’t ruling out making the lender insolvent.

Moody’s lowered Hypo Alpe’s guaranteed senior unsecured bonds to Baa2 from A1 and its guaranteed subordinated debt to Baa3 from A2 and may make further cuts, the ratings firm said in a statement late yesterday. The bonds are guaranteed by the southern Austrian state of Carinthia, which was itself downgraded to A2 from A1 by Moody’s and may be cut further. Carinthia owned Hypo Alpe until 2007.